DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board
Civil Remedies Division
In the Case of: Carlos E. Zamora, M.D., Petitioner,
- v. -
The Inspector General.
DATE: March 30, 1989
Docket No. C-74
DECISION OF ADMINISTRATIVE LAW JUDGE
ON MOTIONS FOR SUMMARY DISPOSITION
Petitioner requested a hearing to contest the Inspector General's (the I.G.)
determination excluding him
from participating in the Medicare program, and directing that he be excluded
from participating in State
health care programs, for five years. Both parties filed motions for summary
disposition of this case.
Neither party contends that there are questions of material fact which would
require a hearing. Based on
the undisputed facts and the law, I conclude that the exclusions imposed and
directed by the I.G. are
mandatory. Therefore, I am deciding this case in favor of the I.G.
BACKGROUND
On October 28, 1988, the I.G. sent notice to Petitioner, advising him that
he was being excluded from
participation in Medicare and any State health care programs for a period of
five years. Petitioner was
advised that his exclusions were due to his conviction of a criminal offense
related to the delivery of an
item or service under the Medicaid program. Petitioner was further advised that
the law required minimum
five year mandatory exclusions from participation in Medicare and State health
care programs for
individuals convicted of a program-related offense.
Shortly after receiving this notice, Petitioner filed an action in United States
District Court, Zamora v.
Bowen, Civil Action No. A-88-CA-987 (W.D. Tex. 1988), seeking to enjoin the
Secretary of Health and
Human Services (the Secretary) from excluding or directing his exclusion from
participating in Medicare
or State health care programs. On November 16, 1988, the Court denied Petitioner's
request for an
injunction, concluding that Petitioner was not likely to succeed on the merits
of his claim that the Secretary
improperly excluded or directed his exclusion from participation in Medicare
or State health care
programs. I.G. Ex. C.
On December 7, 1988, Petitioner timely requested a hearing as to the exclusions,
and the matter was
assigned to me for a hearing and decision. I conducted a prehearing conference
on January 18, 1989, at
which both parties expressed their intent to move for summary disposition. I
issued a prehearing Order on
January 26, 1989, which established a schedule for moving for summary disposition
and for responding to
such motions. The Order also provided that either party could request oral argument
on the motions.
Pursuant to my Order, both parties moved for summary disposition. Neither party
requested oral argument.
ISSUE
The issue argued by the parties in their respective motions is whether Petitioner
was "convicted" of an
offense within the meaning of 42 U.S.C. 1320a-7(i).
APPLICABLE LAWS AND REGULATIONS
1. Section 1128 of the Social Security Act: Section 1128(a)(1) of the Social
Security Act, 42
U.S.C. 1320a-7(a)(1), requires the Secretary to exclude from participation in
the Medicare program, and to
direct the exclusion from participation in any State health care programs, of
any individual or entity
"convicted of a criminal offense related to the delivery of an item or
service" under Medicare or any State
health care program.
Prior to July, 1988, "conviction" was defined at 42 U.S.C. 1320a-7(i)
to include those circumstances when:
(1) a judgment of conviction has been entered against a physician or individual,
regardless of whether there
is an appeal pending or the judgment of conviction or other record of criminal
conduct has been expunged;
(2) there has been a finding of guilt against the physician or individual; (3)
a plea of guilty or nolo
contendere by the physician or individual has been accepted; and (4) the physician
or individual has
entered into participation in a first offender or other program where judgment
of conviction has been
withheld. In July, 1988, Congress clarified this section by revising subsection
(i)(4), substituting the
language "first offender, deferred adjudication, or other arrangement or
program" for the language "first
offender or other program." Pub. L. 100-360, Sec. 411 (July 1, 1988).
The law provides at 42 U.S.C. 1320a-7(c)(3)(B), that for those excluded under
section 1320a-7(a), "the
minimum period of exclusion shall be not less than five years. . . ." It
further provides that an excluded
party may request a hearing as to the exclusion. 42 U.S.C. 1320a-7(f). An excluded
party is entitled to a
hearing to the same extent as is provided in 42 U.S.C. 405(b). That section
provides that a party entitled to
an administrative hearing by virtue of an adverse decision by the Secretary
shall be given reasonable notice
and opportunity for a hearing before the Secretary "with respect to such
decision."
2. Texas Code of Criminal Procedure: The Texas Code of Criminal Procedure
states at Art.
42.12, Sec. 7, that after a defendant convicted in a criminal proceeding has
satisfactorily completed a term
of probation, the sentencing court shall "amend or modify the original
sentence imposed, if necessary, to
conform to the probation period and shall discharge the defendant." This
section further states that, with
exceptions, the court may, in discharging the defendant, "set aside the
verdict or permit the defendant to
withdraw his plea, and shall dismiss the accusation, complaint, information
or indictment against such
defendant, who shall thereafter be released from all penalties and disabilities
resulting from the offense or
crime of which he has been convicted or to which he has pleaded guilty, except
that proof of his said
conviction or plea of guilty shall be made known to the court should the defendant
again be convicted of
any criminal offense."
3. Regulations Governing Suspension, Exclusion, or Termination of Practitioners,
Providers,
Suppliers of Services, and Other Individuals: The Secretary delegated to the
I.G. the authority to
determine, impose, and direct exclusions pursuant to section 1128 of the Social
Security Act. 48 Fed. Reg.
21662, May 13, 1983. Regulations governing suspension and exclusion pursuant
to section 1128 and this
delegation are contained in 42 C.F.R. Part 1001. Section 1001.123(a) provides
that when the I.G. has
conclusive information that an individual has been convicted of a program-related
crime, he shall give that
individual written notice that he is being suspended (excluded) from participation.
Section 1001.128
provides that an individual excluded based on conviction of a program-related
offense may request a
hearing before an administrative law judge on the issues of whether: (1) he
or she was, in fact, convicted;
(2) the conviction was related to his or her participation in the delivery of
medical care or services under
the Medicare, Medicaid, or social services program; and (3) whether the length
of the exclusion is
reasonable.
FINDINGS OF FACT AND CONCLUSIONS OF
LAW
1. Petitioner is a physician who has practiced in Texas. P.'s Memorandum at 1.
2. In 1988, the State of Texas indicted Petitioner for tampering with a governmental
record for
submitting false Medicaid claims. I.G.'s Memorandum at 1.
3. On May 18, 1988, Petitioner entered a nolo contendere plea in Texas state
court to a
misdemeanor offense of tampering with a government record. P. Ex. 2; I.G. Ex.
A. In accepting the plea,
the Court found that the evidence substantiated the Petitioner's guilt of tampering
with a governmental
record. Id..
4. The Court also found that the ends of justice and the best interests of
both society and the
Petitioner would be served by deferring further proceedings without entering
an adjudication of guilt at that
time, and by placing the Petitioner on probation. P. Ex. 2; I.G. Ex. A.
5. On November 2, 1988, an order was entered in Texas state court, pursuant
to Art. 42.12, Sec. 7
of the Texas Code of Criminal Procedure, modifying Petitioner's period of probation
to the time served
from May 18, 1988, discharging Petitioner from probation, withdrawing Petitioner's
nolo contendere plea,
and dismissing the prosecution against him. P. Ex. 3.
6. On October 28, 1988, the I.G. advised Petitioner that he was excluding
Petitioner from
participating in the Medicare program, and was directing that Petitioner be
excluded from participating in
State health care programs, for five years. The exclusions were based on the
I.G.'s determination that
Petitioner had been convicted of a criminal offense related to the delivery
of an item or service under the
Medicaid program.
7. Petitioner's nolo contendere plea in Texas state court constitutes a "conviction"
within the
meaning of 42 U.S.C. 1320a-7(i), notwithstanding the provisions of Article 42.12
of the Texas Code of
Criminal Procedure, or the terms of the November 2, 1988 Order entered in Texas
state court in Petitioner's
case.
8. The actions taken by the I.G., excluding Petitioner from participating
in the Medicare program
and directing his exclusion from participating in State health care programs,
were mandated by 42 U.S.C.
1320a-7(a)(1).
ANALYSIS
There are no disputed material facts in this case. Petitioner acknowledges
that he entered a nolo contendere
plea to a misdemeanor, and, in fact, both the I.G. and Petitioner are relying
on the same document to
establish the circumstances and specifics of the plea. See P. Ex. 2; I.G. Ex.
A. Petitioner does not deny
that the offense to which he pleaded was an offense related to the delivery
of an item or service under the
Medicaid program, nor does he dispute that if his plea is a "conviction"
of an offense within the meaning of
42 U.S.C. 1320a-7(a)(1) and 7(i), then his exclusions were mandated by law.
The only disputed issue in this case is whether Petitioner was "convicted"
of an offense. Petitioner denies
that his plea was a "conviction" and makes several arguments to support
his contention. He notes that his
nolo contendere plea of May 18, 1988 was withdrawn and the indictment against
him dismissed upon
satisfactory completion of his probation in November, 1988, pursuant to the
terms of Art. 42.12, Sec. 7 of
the Texas Code of Criminal Procedure. Petitioner bases his principal argument
on these facts, claiming
that the Texas court's November Order erases any action against him which could
constitute a "conviction"
within the meaning of 42 U.S.C. 1320a-7(a)(1) and 7(i). More specifically, Petitioner
asserts that his plea
could not constitute a plea of nolo contendere within the meaning of 42 U.S.C.
1320a-7(i)(3), because it
has been withdrawn.
Petitioner argues further that his plea and its subsequent treatment by the
Texas court does not fall within
the definition of a "first offender or other program where judgment of
conviction has been withheld"
pursuant to 42 U.S.C. 1320a-7(i)(4). He contends that there are no statutory
"first offender" programs
under Texas law.
Petitioner also contends that the law of Texas intended that his discharge
by the court in November 1988
released him "from all penalties and disabilities resulting from the crime
or offense" to which he pleaded.
P.'s Memorandum at 6. He asserts that the exclusions imposed on him and directed
by the I.G. are
"penalties and disabilities." He argues from this assertion that absent
clear Congressional intent to preempt
state law, the law of Texas should operate to insulate him from such additional
"penalties and disabilities."
He asserts that intent to preempt state law is not evident in 42 U.S.C. 1320a-7,
and, therefore, any conflict
between Texas law and the terms of 42 U.S.C. 1320a-7(i) must be resolved in
his favor. He claims that the
"attempted application of the federal exclusionary rules as sought by the
Inspector General in this case
thwart. . .[the] legitimate application of the State's police power." P.'s
Memorandum at 8.
The I.G. asserts that Petitioner was "convicted" within the meaning
of 42 U.S.C. 1320a-7(a)(i) and 7(i).
The I.G. contends that Congress intended pleas of nolo contendere to constitute
"convictions" even in those
circumstances where such pleas were subsequently withdrawn or expunged, pursuant
to deferred
adjudication programs. I.G.'s Memorandum at 6-7.
The I.G. argues that there is no merit to Petitioner's contention that Texas
law shields Petitioner from
federally imposed or directed exclusions. The I.G. contends that the Texas law
was not intended to shield
Petitioner from federal exclusions. Furthermore, according to the I.G., the
intent of Congress in enacting
42 U.S.C. 1320a-7 was not to displace state criminal law, but to define "conviction"
in a way which would
enable Congress to delineate the circumstances under which individuals would
be excluded from federally
operated and financed programs. See I.G.'s Reply Memorandum at 5. Finally, the
I.G.argues that if a
conflict exists between the terms of Texas and federal law, then federal law
governs.
I conclude that Petitioner's nolo contendere plea constituted a "conviction"
within the meaning of 42
U.S.C. 1320a-7(a)(i) and 7(i). I base this conclusion on both the plain meaning
of the law and on
legislative history. I conclude further that there is no conflict between this
law and Texas law, and, as there
is no conflict, it is unnecessary for me to consider the question of whether
42 U.S.C. 1320a-7 preempts
state law.
In the applicable statute "conviction" is defined to include acceptance
of a plea of nolo contendere by a
court. 42 U.S.C. 1320a-7(i)(3). There exists nothing in this language to suggest
that the definition is
qualified by a subsequent act of expungement, or dismissal of a plea, based
on satisfactory completion by
the offender of a term of probation. The event described by the subsection as
constituting a "conviction" is
the entry and acceptance of the plea. Petitioner in this case entered a plea
of nolo contendere to an offense
related to the delivery of an item or service under the Medicaid program. In
accepting his plea, the Texas
court found that there existed sufficient evidence to convict for the offense
of which he was charged. His
plea fell within the statutory definition of a "conviction." It is
irrelevant that under Texas law Petitioner
was permitted to subsequently withdraw his plea after satisfactorily completing
a period of probation.
The circumstances of Petitioner's case fall not only within the plain meaning
of subsection 7(i)(3), but
within the plain meaning of subsection 7(i)(4), as well. As of the date Petitioner
entered his plea, the latter
subsection included within the definition of "conviction" the situation
in which "the physician or individual
has entered into participation in a first offender or other program where judgment
of conviction has been
withheld." The Order memorializing Petitioner's plea is captioned "Deferment
of Adjudication." P. Ex. 2;
I.G. Ex. A. Pursuant to Texas law, Petitioner was permitted to withdraw his
plea, based on the fact that he
had satisfactorily served his sentence. On its face, the treatment of Petitioner's
case by the Texas court falls
within the term "other program where judgment of conviction has been withheld."
Congress' enactment of mandatory exclusion requirements for individuals or
entities convicted of program-
related offenses was a legislative judgment that such parties could not be trusted
with public funds.
Congress determined that parties who pleaded guilty to such offenses were as
untrustworthy as those
convicted after a trial:
If the financial integrity of Medicare and Medicaid
is to be protected, the programs must have the
prerogative not to do business with those who have
pleaded to charges of criminal abuse against them.
H. Rep. No. 99-727, 99th Cong., 2d Sess. 1986 reprinted in 1986 U.S. Cong.
Code & Adm. News, 3607,
3664-65. In Congress' view it was irrelevant that such parties might subsequently
receive lenient treatment
by the courts, or have their convictions expunged:
With respect to convictions that are "expunged," the Committee intends
to include all
instancesof conviction which are removed from the criminalrecord of an individual
for any reason other
thanthe vacating of the conviction itself, e.g., aconviction which is vacated
on appeal.
1986 U.S. Cong. Code & Adm. News, 3665. Therefore, the fact that Petitioner's
plea may have been
dismissed or expunged in state court based on his satisfactory completion of
a probation period is of no
consequence to the determination that the entry and acceptance of his plea constituted
a "conviction"
within the meaning of 42 U.S.C. 1320a-7(a)(1) and 7(i).
There is no conflict between 42 U.S.C. 1320a-7 and Article 42.12 of the Texas
Code of Criminal
Procedure which would raise the question of whether Congress intended to preempt
state law. Petitioner's
assertion that a conflict exists is premised on his argument that the exclusions
mandated by 42 U.S.C.
1320a-7(a)(1) for persons convicted of program-related offenses constitute additional
punishment to that
imposed by state criminal laws. I disagree with this analysis. It is evident
from the face of the federal
statute, as well as from the legislative history cited above, that Congress'
intent in enacting the exclusion
legislation was remedial and not punitive. A principal objective of the law
was to protect the financial
integrity of federally funded health care programs from those who have proven
themselves to be
untrustworthy. That excluded individuals might be financially disadvantaged
by their exclusions is an
incidental effect. Because the intent of Congress was not to "punish,"
the exclusion remedy cannot be
viewed as constituting an additional punishment beyond that contemplated by
Texas law.
Furthermore, I am satisfied that it was not the purpose of the deferred adjudication
provisions of the Texas
Code of Criminal Procedure to immunize Petitioner from exclusions imposed pursuant
to 42 U.S.C. 1320a-
7(a)(1). In Gonzalez de Lara v. United States, 439 F.2d 1316 (5th Cir. 1971),
the Fifth Circuit considered
the meaning of Texas' deferred adjudication and expungement provisions in circumstances
analogous to
those presented in this case. Appellant was a resident alien whose deportation
had been ordered based on
his conviction under Texas law for possession of marijuana. He argued that he
had not been finally
"convicted" because, under Texas law, he had the right to petition
to expunge and erase his conviction.
The Court rejected this argument, holding that the Texas law was intended to
provide a party with limited
protection from additional Texas penalties. 439 F.2d at 1318.
The I.G. notes that the issues raised by Petitioner in this case were considered
in federal district court in
Petitioner's action for injunctive relief. As I noted above, the Court denied
Petitioner's request, on the
ground that there was little probability that his claim would succeed on the
merits. Zamora v. Bowen, Civil
Action No. A-88-CA-987 (W.D. Tex. 1988). The I.G. urges that the Court's decision
in that case is
dispositive of the issues before me. It is clearly persuasive, and I agree with
the Court's assessment of the
merits. However, it is not dispositive; the Court there addressed only the issue
of entitlement to injunctive
relief and did not render a decision on the merits.
CONCLUSION
Based on the undisputed material facts and the law, I conclude that the I.G.'s
determination to exclude
Petitioner from participation in the Medicare program, and to direct that Petitioner
be excluded from
participation in State health care programs, for five years, was mandated by
law. Therefore, I am entering
a decision in favor of the I.G. in this case.
________________________
Steven T. Kessel
Administrative Law Judg
Addressees:
RETURN RECEIPT REQUESTED
Carla J. Cox, Esq,
Small, Craig, and Werkenthin
Suite 1100, 100 Congress Avenue
Austin, Texas 78701-4099
and
Michael Pearle, Esq.
Assistant Regional Counsel
DHHS - Region IV
Room 1300
1200 Main Tower
Dallas, Texas 75202
cc: Office of Inspector General
Office of Investigations
Room 3-C-1, Meadows East Building
Baltimore, Maryland 21207
Regional Inspector General
Office of Investigations
Attn: Carl Gruninger
1100 Commerce Street, 4E1B,
Dallas, Texas 75242